Town Square

Fiscal Cliff-diving: Play the Principles and Priorities Game (with Prizes!)

Original post made
by Tom Cushing, Danville,
on Nov 28, 2012

Okay, we all know that Congress is in disrepute with The Electorate -- otherwise, why would we have returned so many Incumbents to their seats in the Capitol? We also harbor suspicions that we could each do a Much better job than they do, if only we were willing to suffer the many indignities of public life and perpetual campaigning.

Well, okay then here's your chance! The Concord Coalition Web Link , a leading non-partisan, budget-centered organization, has put together a game that lets you (yes, YOU) allocate the federal budget, raising and spending money where you think it ought to go (admittedly, reality is tempered by the fact that you are seeking only the best result for the nation, e.g., you don't have a defense plant in your district). Where else could you get the chance to spend literally trillions of dollars as you see fit, almost all of it coming from other people? The game's been played in many educational and other group settings across the country -- so, sez I, why not here?

It consists of a Playbook in which you record your choices on numerous budget components, and an Options booklet that explains the pros, cons and $$ implications of each choice. The Playbook choices are grouped into five major categories: Discretionary Spending, Security/Defense, Health Care/Social Security, and, to be fair and balanced, Taxes/Revenues.

So, here's how it goes:

1. Gather and name your team or yourself (e.g., couples, friends or families -- any size team, including solo, although it's ideal to have more than one perspective), then

2. Email me that info (aliases okay!) at dxraucouscaucus@gmail.com. I will send back the Playbook and Options booklet as attachments. The info in the materials is final, because it has to be -- no arguments about its accuracy can be accepted.

3. Play the game, recording your choices in the Playbook.

4. When your team is convinced that you have created the best possible budget, email it back to me in the five Category format. DEADLINE: December 12th, 11:59 PM.

5. On December 14th, all or the best entries will be posted here for discussion and advocacy. I have no idea how many entries we'll get in case of too many, the finalists will be chosen by a panel of Jessica Lipsky, Bernie Madoff (he has "time"), Warren Buffett, Jimmy Buffett and Bo, the First Dog.

6. We will then vote for the top 3 Teams, by email above. Results certified by PriceWaterstonCoppers.

7. Winner announced on December 26th. GRAND PRIZE: the biggest, bestest Primo's pizza you can order. Second Prize: a lesser sum that your team can spend on itself, or graciously choose to donate in this Season of Giving, to the deserving critters at Tri-Valley Animal Rescue (TVAR).

I don't have time to play the game Tom suggests. But I want to make a few comments.

Wouldn't it be great if we had a congress and a president who actually held regular meetings to discuss how to fix the fiscal cliff? Is it really necessary for the president to go around the country holding rallies all the time, like at that Tinker Toy factory this week? Come on guys. The campaign is over. Go into your bunkers and don't come out until it's fixed.

And please stop with the fantasy that we can solve our problems by raising taxes on just 2% of the population. As the Concord Coalition website notes, "Tax burdens will probably have to come up on almost everyone, far from the 'almost no one' fantasy tax policy world we've been stuck in."

We also need to be open to new sources of revenue, rather than just income tax, because it's easy to make a lot of money without having taxable income. Most of America's wealth is in stocks, bonds, and other financial instruments. If we raise taxes on these items, people will figure out ways to shelter that income from tax.

And fed & state taxes on wages in the $350,000 - $500,000 range are already taxed at about 50%. How much higher do you want them to go? People who have those types of wages are doctors, dentists, and other professionals who incur large student loan debt, risk, and opportunity costs by going to graduate school, medical residency, etc. Increasing taxes on their wages will cause people to rethink those professions. Do we really need fewer doctors? (I deliberately left lawyers off that list. Ha ha.)

If we want to become a European welfare state, we need to tax people like they do in Europe, with a broad based tax that EVERYONE pays. That's the only way to generate the amount of money we will need to pay our welfare costs.

In Europe, they have a VAT to pay for it. A VAT increases the cost of consumer goods, it's complex, difficult to administer, subject to abuse, and puts politicians at the center of power in choosing which VAT rate applies to which industries, which industries must pay and which do not, which consumers get VAT refunds, fraud, and other problems.

The Republican Paul Ryan's budget called for an 8% national VAT. There is a zero chance of a VAT passing right now. Democrats hate the VAT because it's regressive and thus harms the poor the most. Republicans hate all taxes.

Personally, as a tax lawyer, I would love a VAT. It would provide an endless opportunity to practice my trade. But I think the last thing the American economy needs is a new complex tax, like the VAT.

I think a carbon tax is probably our best bet. It could generate trillions of new tax revenue.

Most people buy into the fantasy that they can somehow help stop climate change. Never mind that we deforest over 6 million hectares per year, or that China is building a new coal power plant every week. Americans are primed for a slick idea, and a carbon tax may be just the ticket.

A carbon tax could be collected at the source, e.g. refineries, power plants, etc., and then passed along to consumers so cheating is minimized. It would be easy to administer, by the IRS, so no new government agencies would be needed. We already have an excise tax structure in place. You wouldn't even need new tax forms. Just add a carbon tax line to existing excise tax forms.

Most people wouldn't even realize they're paying it. For example, California just held its first carbon auction last week. Most people I know have no idea that this should generate around $14 billion of new tax revenue each year for California. People will pay more for electricity, gasoline, an consumer goods. But because it's not a tax on their income or property, they're less hostile to the idea. The average Californian knows nothing about it.

Compare that to the fight that occurred when trying to pass Prop. 30, which should generate a measly $6 billion a year, and all the bad press it generated now that it caused California to have the highest tax rate in the nation. A carbon tax is a much better approach because most people are too stupid to realize they're paying more to the government.

It would also be a great source of revenue to help fund President Obama's commitment to the Green Climate Fund, that UN program. It's just a modest $100 billion per year cost, paid for mostly by the U.S. and other rich countries. The money will be given to poor countries all over the world to help them fight climate change. That's not socialism. And those foreign governments won't misuse that money. That's more important than funding things like Medicare and Social Security, right? You did know that President Obama committed the U.S. to pay for that, right? Of course you did. You Obama supporters are super smart. Web Link

Albeit that S-P could've played the game in the time it took to compose his comment (there's still time to enter!), the carbon tax may be an idea that could actually garner broad support, at least outside the grover'd confines of the House. And as to fantasy or not, every internalized externality represents some progress.

But beware, S-P, you might start thinking like a leebrul. Here's what the New Yorker had to say this morning: Web Link

I hope that's not a restricted link -- if so, here's some of the gist:

"Perhaps because a carbon tax makes so much senseresearchers at M.I.T. recently described it as a possible "win-win-win" response to several of the country's most pressing problemseconomists on both ends of the political spectrum have championed it. Liberals like Robert Frank, of Cornell, and Paul Krugman, of Princeton, support the idea, as do conservatives like Gary Becker, at the University of Chicago, and Greg Mankiw, of Harvard. ... A few weeks ago, more than a hundred major corporations, including Royal Dutch Shell and Unilever, issued a joint statement calling on lawmakers around the globe to impose a "clear, transparent and unambiguous price on carbon emissions," which, while not an explicit endorsement of a carbon tax, certainly comes close. Even ExxonMobil, once a leading sponsor of climate-change denial, has expressed support for a carbon tax. "A well-designed carbon tax could play a significant role in addressing the challenge of rising emissions," a spokeswoman for the company said recently in an e-mail to Bloomberg News."